Short-Run Demand Relationships in the U.S. Fats and Oils Complex

By Goodwin, Barry K.; Harper, Daniel et al. | Journal of Agricultural and Applied Economics, April 2003 | Go to article overview

Short-Run Demand Relationships in the U.S. Fats and Oils Complex


Goodwin, Barry K., Harper, Daniel, Schnepf, Randy, Journal of Agricultural and Applied Economics


Fats and oils play a prominent role in U.S. dietary patterns. Recent concerns over the negative health consequences associated with fats and oils have led many to suspect structural change in demand conditions. Our analysis considers short run (monthly) demand relationships for edible fats and oils. In that monthly quantities of fats and oils are likely to be relatively fixed, an inverse almost ideal demand system specification is used. A smooth transition function is used to model a switching inverse almost ideal demand system that assesses short-run demand conditions for edible fats and oils in the United States. The results suggest that short-run demand conditions for fats and oils experienced a gradual structural shift that began in the late 1980s or early 1990s and persisted into the mid-1990s. Although this shift generally made price flexibilities more elastic, differences in scale flexibilities across regimes were modest in most cases. The results suggest that decreases in marginal valuations for most fats and oils in response to consumption increases are rather small. Scale flexibilities are relatively close to - 1, suggesting near homothetic preferences for fats and oils.

Key Words: fats and oils, inverse demand system, structural change

JEL Classifications: Q0, D1

Fats and oils play an important role in the diet of the typical American consumer. Park and Yetley estimated that direct consumption of fats and oils accounts for 33% of the total dietary fat in U.S. food sources. Consumption of fats and oils has been linked to increased risks of coronary disease and certain types of cancer. In spite of increased public concerns over the consequences of a diet rich in fats and oils, U.S. per capita consumption of fats and oils has risen significantly over the past 20 years. For example, total annual consumption of fats and oils increased from 57.4 pounds per person in 1981 to 65.6 pounds per person in 1997 (Putnam and Allshouse). Although overall consumption of fats and oils has been increasing, there have been significant shifts among individual commodities within the fats and oils complex. For example, consumption of animal fats, such as butter, lard, and beef tallow, has fallen in recent years. At the same time, consumption of vegetable fats and oils has increased significantly, at least through the early 1990s. Recent trends in annual per capita consumption of selected fats and oils are illustrated in Figure 1. In that this diagram illustrates annual consumption, seasonal aspects of consumption are not revealed, although such seasonality is discussed below.

Existing research on the demand for fats and oils is rather sparse, and thus current knowledge of demand parameters is rather limited. One line of research has considered modeling demand relationships for aggregated groups of commodities such as butter, margarine, shortenings, and cooking oils. Gould et al. used demographic scaling of demand system parameters to evaluate the role of changing demographics in the aggregate demand for fats and oils between 1962 and 1987. Their results indicated that demographic variables such as education, race, and age were important determinants of preferences for fats and oils and thus that changes in these factors lead to structural changes in aggregate demand patterns for fats and oils.

Demand conditions for individual fats and oils were evaluated by Chern et al., Goddard and Glance, and Yen and Chern. In each case, annual consumption data on the most prominent individual fats and oils were used to evaluate long-run demand conditions. These studies revealed that individual fats and oils are both substitutes and complements for one another in consumption. In addition, considerable variation in own-price and expenditure elasticities was found across individual oils.

A central theme inherent in the existing literature on the demand for fats and oils is the suspicion that exogenous factors (either demographic factors or greater health awareness) have brought about structural shifts in demand relationships. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Short-Run Demand Relationships in the U.S. Fats and Oils Complex
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.